Written Commentary
BASE METALS
Copper: LME copper was up 0.6% at $14,240; US prices are up 0.97% to $6.5440 as a softer dollar and a downgrade to Chile’s copper production outlook lifted prices. Talks between Iranian and Qatari officials have lifted hopes of a possible US-Iran deal that could reopen the Strait, which has sent oil and the dollar down. Meanwhile, Cochilco, Chile’s copper commission, lowered its forecast for copper production this year while projecting softer than expected production in 2027. Cochilco estimates Chilean copper production in 2026 will fall 8.4% to 4.94 million metric tons, compared to August’s estimate of 5.27 million tons. Cochilco also expects 2027 production to rise 3% to 5.08 million tons, versus the August estimate of 5.55 million tons.
Inventories in LME-approved warehouses rose overnight to 293,775 tons to mark their highest since July, following the delivery of 20,500 tons to the warehouse in New Orleans. However, inventory that is delivered into US warehouses has had limited impact on prices, suggesting that the market is discounting any increase related to LME-held US warehouses. The story would otherwise be different if copper were moved to other global warehouses.
Zinc: Zinc rose 0.4% to $3,859.
Aluminum: Aluminum lost 0.3% to $3,059.
Tin: Tin added 0.9% to $49,300.
Lead: Lead fell by 0.5% to $1,901.
Nickel: Nickel gained 1.4% to $15,480.
PRECIOUS METALS
Gold: December gold contracts are recovering amid a drop in oil prices and the dollar index. Hopes of an end to US-Iran hostilities are leading oil and the dollar lower, which is allowing gold to find some breathing room. Gold falling below the $4,000 level offers central banks a cheaper opportunity for further purchasing, which would reflect a trend the market has seen over the last two years. That dynamic is likely to keep gold prices supported against further downside and offers a solid purchasing opportunity for investors.
The market is likely to remain lightly traded heading into US midterms, though prospects of a US-Iran deal could see oil prices drop further and reduce Fed tightening expectations, leading gold higher. However, if current macro conditions hold, expectations of a move upwards in policy in December will continue to act as a headwind. September’s PCE reading remains too firm to suggest that the Fed’s work is complete. December rate hike odds are priced at 78%. Today’s ISM prices-paid component will provide a more current view of manufacturing cost pressure, while the Senior Loan Officer Opinion Survey will help assess the credit restraint emphasized by Warsh after the October hold. Friday’s payrolls will be central to determining whether labor-market resilience continues to justify another increase.
Silver: December contracts are up 3.47% to $51.025.
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